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Whats the problem ?
The fact of the matter is, housing costs have SKYROCKETED in the lower mainland, and in many areas across the country, leaving most 'average' people behind.
From the Real Estate Board of Greater Vancouver (2006):
Tri Cities home prices:
Detached $ 565,930 (3 year change: + 58.3%)
Attached $ 363,369 (3 year change: + 56.3%)
Apartment $ 251,636 (3 year change: + 73.6%)
How can we reconcile these numbers, against income numbers, such as the following from the City of Coquitlam report on affordable housing:
Dual-income couple families have the most choice in the housing market.As of 2003, the median income for these families was $74,000, sufficient to allow them to pay $1,857 on housing without spending more than 30% of their income on housing. Using conventional financing and 10% down-payment, these households can afford a home valued around $ 305,000.
SO - a dual income couple, with a median income of $ 74,000 , can afford an apartment. Not a house, not even a townhouse, in this area ! We would hardly consider this family, with a $ 74,000 annual income, "low income" , however, even this middle class family would be unable to afford what most would consider "suitable" housing. Low income families dont stand a chance in this market !
This is the MARKET - home prices are market driven, supply and demand - and generally only loosely based on 'real cost'. The cost of the land, plus the cost of construction, materials and furnishings in theory is the cost of a home - add a profit margin for the builder and you should have a selling price. Homes, however, have rarely, if ever, worked this way - house prices vary substantially based on market demands. These days, this is primarily based on land value - a BARE lot in the tri cities is now worth about $ 1 million per acre. Construction costs have also increased, quite substantially over the past few years, but land value is still the primary driver of housing cost.
Burnaby and Vancouver have traditionally had higher house prices as people have desired to live closer to where they work or the 'big cities'. Suburbs, have traditionally had lower prices as there has been less demand to live further from the city centres. Not that many years ago, land, and homes, in Maple Ridge could be had at a fraction of the cost of Vancouver - however, with the increase in populations, the suburb prices have risen dramatically, and to find the cheaper prices, you must now go much further away from the urban core. Abbotsford, Langley, Chilliwack, Mission - all of these areas, once thought of us much too far for a daily commute, have seen property/home price increases of 100% or more over the past 5 years.
Nov 15,2007 - Update on some of the numbers:
When people speak of affordable housing, what are they talking about ?
There is a common definition of affordable housing being housing that requires 30% or less of a families income (gross income) per year.
The median family income for Port Moody in 2001 census is $ 70,239 (for BC is $ 54,840)
30% of 70,239 is 21071.70 per year or 1755 per month.
Intrestingly, the average income of Mortgage applicants from Port Moody for 2007 is $ 93,769.91
while the median is $ 70,000 (a number very close to the census date of the population ) http://www.canequity.com/british-columbia/port_moody-mortgages.htm
At 5.88%, a 25 year amortization, $ 1739 / month would secure a $ 275,000 mortgage. Assuming 10% downpayment this would allow the family with the Port Moody Median income to purchase a home worth roughly $ 300,000.
What can 300,000 buy you in Port Moody ? At the time of this writing, there are 2 townhomes available in Westhill and one in Coronation Park that a family could reasonably live in that are $ 300,000 or below (and just slightly below at $ 285,000 !).
The least expensive single family property on MLS at November 15,2007 is a 1930's house on St George Street listed at $ 449,000. Using the same 5.88 / 25 year amortization, this would translate to $ 2847 per month mortgage payment, which is 30% of $ 9500 / month or $ 114,000 per year. About 15-17% of the (national) population has family incomes > $ 115,000 - so the CHEAPEST single family property in Port Moody is affordable to only 15% of the population. (This number could be higher in Port Moody)
"In 2005, purchase of a single family house in Greater Vancouver required a minimum household income of $121,921 - only 16.4 per cent of households have incomes at or above $100,000."
The average house price in Port Moody on Nov 15/07 seems to be around $ 600,000 based on MLS listings. ($ 3796 / month mortgage = more than $ 150,000 houshold income @ the 30% mark). |